{"data":{"proposalCid":"QmbSBNs9i4tVxXKnKKWPXTKqWMNYtAR8ZjZUe3qQUMu7US","content":"**Polkadot 10MS-CS Model: A Sustainable Economic Framework**\n\n---\n\n**Disclaimer:** This document presents a **proposal** for Polkadot's economic model, including **projections based on approximate current numbers and realistic assumptions**. It's important to understand that **actual outcomes may vary significantly** due to both **exogenous factors** (external, uncontrollable events like broader market shifts, regulatory changes, or technological advancements) and **endogenous factors** (internal dynamics within the Polkadot ecosystem, such as changes in network usage, staking behavior, or governance decisions). This model serves as a framework for discussion and future adaptation.\n\n---\n\n### Objective\nThe 10MS-CS Model features:\n- A 10% inflation rate based on the (Maximum Supply - Circulating Supply) gap.\n- A 2.5 billion DOT cap by 2105 (80 years).\n- Strategic coretime sales and transaction fee distribution, with DOT burning, validator rewards, and treasury funding.\n- Assumed DOT price appreciation to ensure long-term network stability and validator incentives.\n\n### Parameters\n- **Maximum Supply:** 2,500,000,000 DOT\n- **Starting Circulating Supply (July 2025):** 1,595,666,163 DOT\n- **Inflation Rate:** 10% of (2.5B - CS) until CS = 2.5B (2105), then 0%.\n    - Formula: `0.10 * (2,500,000,000 - CS)`\n- **Coretime Sales (Annual):** 1,800,000 DOT/year (~**$6.696M** at **$3.72**/DOT)\n    - **2025 Distribution:** 80% burned (1.44M DOT), 10% validators (180,000 DOT), 10% treasury (180,000 DOT).\n    - *Burn Reduction:* Burns reduce 1%/year to 0% by 2105. Validators' share increases to 90%.\n- **Transaction Fees (Annual):** 5,000,000 DOT/year (~**$18.6M** at **$3.72**/DOT)\n    - **Until Cap:** 25% burned (1.25M DOT), 10% treasury (0.5M DOT), 65% validators (3.25M DOT).\n    - **Post-Cap:** 10% treasury (0.5M DOT), 90% validators (4.5M DOT).\n- **Price Appreciation Assumption:** 5% annually (**$3.72** in 2025 to ~$39.29 in 2105). with 10% annually yields **~$482.97**.\n\n### Assumptions\n- **Current Treasury Balance:** ~109 million DOT\n- **Current Staking:** 47.5% (758M DOT)\n- **Current Inflation (estimated):** 7.3% (~$522M)\n- **Current APY for Stakers:** 8%\n- **Governance Model:** OpenGov\n\n### Projection (2025–2105) - Key Data Points\n\n| Year | CS Start (DOT) | Inflation (DOT) | Coretime Burn (DOT) | Net Change (DOT) | CS End (DOT) | Price 5% (USD) | Rewards 5% (USD) |\n| :--- | :------------- | :-------------- | :------------------ | :--------------- | :------------- | :--------------- | :--------------- |\n| 2025 | 1,595,666,163 | 90,433,384 | 1,440,000 (80%) | 87,743,384 | 1,683,409,547 | **3.72** | ~**263.7M** |\n| 2035 | 2,274,518,820 | 22,548,118 | 1,278,000 (71%) | 20,020,118 | 2,294,538,938 | 6.06 | ~514.8M |\n| 2050 | 2,426,673,091 | 7,332,691 | 990,000 (55%) | 5,092,691 | 2,431,765,782 | 12.50 | ~1.15B |\n| 2075 | 2,487,177,834 | 1,282,217 | 540,000 (30%) | -507,783 | 2,486,670,051 | 39.29 | ~3.61B |\n| 2105 | 2,499,496,038 | 503,962 | 0 (0%) | -746,038 | 2,499,750,000 | 39.29 | ~4.95B |\n\n**Polkadot Supply and Price (2025–2105) Chart:**\n\n![Polkadot Supply and Price (2025–2105)](\n![10MS-CS.png](https://subsquare.infura-ipfs.io/ipfs/QmY4zMv6wteqngExLBPk8AdXhRkwJdTCA8EziZDL4j79kn)\n)\n\n### Market Impact\nOnce the market is aware of this model's predictable and fixed token supply, especially the initial drop in net issuance, it is expected to **reduce immediate selling pressure**. This structure is designed to **encourage holding, accumulation, and promote proper resource and capital efficiency** within the Polkadot ecosystem.\n\n### Key Outcomes\n- **Supply:** 1.595B to 2.5B DOT by 2105 (0.57% annualized), then stable.\n- **Inflation:** Decreases from 90.4M DOT to ~0.5M DOT by 2105.\n- **Burns:** ~110.9M DOT burned total until 2105 (coretime + fees).\n- **Revenue (USD):** Coretime (~**$6.696M**/year), Fees (0.5M DOT to treasury, 3.25M DOT to validators initially). Post-2105, significant USD value due to price appreciation.\n- **Validator Returns:** While the *inflationary component* of DOT rewards decreases, the **USD value of validator rewards is projected to increase significantly** (e.g., ~**$263.7M** in 2025 to ~**$4.95B** in 2105 at 5% price appreciation). This shift is driven by price appreciation and the increasing share of coretime sales and transaction fees allocated to validators, ensuring robust incentives despite decreasing DOT issuance. **It is important to note that inflation (new token issuance) does not directly equal return to participants; returns will increasingly be derived from coretime sales and transaction fees.**\n- **Coretime:** USD value stable at ~**$6.696M**, requiring fewer DOT over time.\n\n### RFP Questions 15–21 Highlights\n- **Q15 (Inflation Schedules):** The 10MS-CS Model offers a continuous, decreasing inflation linked to the supply gap, designed to precisely hit the 2.5B cap.\n- **Q16 (Inflation):** Model provides controlled issuance, a defined cap, and robust burn mechanisms, ensuring long-term value.\n- **Q17 (Validator Rewards):** Projected USD rewards significantly increase, ensuring strong incentives despite decreasing DOT APY.\n- **Q18 (Treasury Income):** Initial direct treasury income is lower than current balance, requiring strategic use of existing 109M DOT. Long-term treasury funding is robust with price appreciation.\n- **Q19 (Market Cap):** Expected to grow significantly due to DOT price appreciation.\n- **Q20 (Benefits of Cap):** Scarcity, enhanced investor confidence, and stable coretime value.\n- **Q21 (Disadvantages of Cap):** Lower DOT APY for validators and early treasury income shortfall (in newly generated DOT) are offset by price appreciation and leveraging the existing treasury.\n\n### Implementation\n- **Technical:** Requires runtime upgrade.\n- **Governance:** OpenGov proposal.\n- **Monitoring:** Continuous monitoring and adjustments.\n\n### Notes\n- Coretime: 1.8M DOT/year is realistic. Higher volumes (e.g., 3.6M DOT/year) could accelerate cap.\n- Price Appreciation: Crucial for USD value of rewards and treasury.\n- Risks: Early treasury income needs careful management, mitigated by existing ~109 million DOT treasury.","contentType":"markdown","commenterNetwork":"polkadot","version":"2","timestamp":1752181260},"address":"12mau4BNUw6iaRaB4bvF4dLuy4B9HMgYGLV13XHYJ8sf62pW","signature":"0x94825cf2748808b7cba4458087e95d7f349e559813df68d7f4f5bbed030a8f0bd4b8a72e02577defe8c7b3c9fa491f71d9246140875040ca37553f4ba1428e8b","version":"2"}